RF Industries, Ltd. (NASDAQ:RFIL) Q2 2019 Earnings Conference Call June 12, 2019 4:30 PM ET
Todd Kehrli - President, MKR Group
Rob Dawson - President and CEO
Mark Turfler - CFO
- Todd Kehrli - MKR集团总裁
- Rob Dawson - 总裁兼首席执行官
- Mark Turfler - 首席财务官
Aman Gulani - B. Riley FBR
Aaron Martin - AIGH Investment Partners
- Aman Gulani - B. Riley FBR
- Aaron Martin - AIGH投资合伙人
Welcome to the RF Industries' Second Quarter Fiscal 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded today, Wednesday, June 12, 2019.
At this time, I would like to turn the conference over to Mr. Todd Kehrli of MKR Group. Please go ahead, sir.
欢迎来到RF Industries的2019财年第二季度财务业绩电话会议。 此时，所有参与者都处于只听模式。 稍后，我们将进行问答环节。 [运营商说明]提醒一下，今天，即2019年6月12日星期三，正在记录此电话。
此时，我想将会议转交给MKR集团的Todd Kehrli先生。 请继续，先生。
Thank you, operator. Good afternoon and welcome to RF Industries' second quarter fiscal 2019 financial results conference call. With me on today's call are RF Industries' President and CEO, Rob Dawson; and Chief Financial Officer, Mark Turfler.
Before I turn the call over to Rob and Mark, I'd like to cover a few quick items. This afternoon, RF Industries issued a press release announcing its second quarter fiscal 2019 financial results. That release is available on the company's website at rfindustries.com. This call is being broadcast live over the Internet for all interested parties and the webcast will be archived on the Investor Relations page of the company's website.
I'd like to remind everyone that on today's call, management will make forward-looking statements that involve risks and uncertainties. Please note that except for historical statements, statements on this call today may constitute forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. When used, the words anticipates, beliefs, expects, intend, future and other similar expressions, identify forward-looking statements.
These forward-looking statements reflect management's current views with respect to future events and financial performance and are subject to risks and uncertainties and actual results may differ materially from the outcomes contained in any forward-looking statements.
Factors that could cause these forward-looking statements to differ from actual results include delays in development, marketing or sales of products and other risks and uncertainties discussed in the company’s periodic reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. RF Industries undertakes no obligation to update or revise any forward-looking statements.
I’ll now turn the conference call over to Rob Dawson, President and Chief Executive Officer. Go ahead, Rob?
谢谢运营商。下午好，欢迎参加RF Industries 2019财年第二季度财务业绩电话会议。在今天的电话会议上，我是RF Industries的总裁兼首席执行官，Rob Dawson
Thanks, Todd. Good afternoon, everyone and welcome to our second quarter fiscal 2019 earnings call. We're pleased to report a strong second quarter with solid sequential growth in both our revenue and net income over the first quarter. We grew net sales 28% sequentially in Q2, reflecting quarter-over-quarter growth in both of our reporting segments.
Net income was up 66% sequentially, reflecting our continued progress with improving efficiencies and controlling G&A and highlighting our ability to be profitable at varying levels of revenue. Our backlog at the end of Q2 was just above $10 million, which is our third straight quarter with backlog over $10 million.
Now let's take a moment and talk about it one final time. In Q2, we were up against a very tough comparison to last year's second quarter, which was our largest quarter ever in the company history by far, with $20 million in sales. Due to last year included several large orders from one customer that we don't expect to repeat at that same level. I said it at the time and again on every quarterly call since. We're not yet to the point of consistently delivering $20 million quarters and that we shouldn't expect that size quarter again in the short-term.
I've also said all along that when given these kinds of opportunities, it's important to address head on the possibility that it won't repeat right away, but you have to leverage the win as a bridge to transform the company into what's next.
In hindsight, it's kind of ironic that somehow our huge Q2 last year might not have been recognized for what it has allowed us to leverage. It gave us a solid new customer that we've turned into a long-term relationship with meaningful orders for similar products continuing every quarter since, including the current quarter. It proved to us that we can execute at a very high level when faced with some tough timelines.
We were asked to deliver at an incredible volume, and we did. It also reiterated that we have products and capabilities that can flourish in a very competitive marketplace. And it added significant cash to the balance sheet, which we are focused on responsibly redeploying to grow and transform the company.
Finally, while our step change in revenue last year included this huge chunk of sales in Q2, we continued producing larger quarterly results over the last year compared to historicals, positioning us for another strong year this year.
Now back to the current results, the sequential increase in our top line in the second quarter was driven by both organic growth in the low-double digits, as well as inorganic growth from our recent acquisition of C Enterprises, which contributed about six weeks of results in the quarter. The C Enterprises team has been executing well, and I'm pleased to note that since the acquisition, we've already seen a significant increase in the volumes they're producing compared to historical levels.
During the quarter, we saw continued to spend from our Tier 1 wireless customer, while also seeing continued growth in our OEM segments and increased business from our distribution channels and other key applications like traditional macro sites, public safety, and distributed antenna systems.
现在回到目前的结果，第二季度我们的收入增长的顺序增长是由于低位数的有机增长以及我们最近收购C Enterprises的无机增长所致，这些增长贡献了大约6周的时间。结果在本季度。 C Enterprises团队一直表现良好，我很高兴地注意到，自收购以来，与历史水平相比，我们已经看到他们的产量大幅增加。
A good measure of the positive progress we're making with leveraging our distribution channels is the significant growth we're seeing in our RF Cable and Connector business, which grew 22% year-over-year in Q2. This is the second straight quarter of double digit growth year-over-year for this business segment, highlighting the benefits we're starting to see from our focus on driving more business through distribution.
While wireless continues to be our biggest growth opportunity, we're also seeing upside in OEM market segments. These segments are primarily the industrial markets, such as manufacturing, defense, aerospace, oil and gas, transportation, mining, agriculture and others. During Q2, specifically, we benefited from business in rail and public transportation applications, as well as with our traditional industrial manufacturing customers.
As we've noted before, our growth strategy focuses on both generating organic growth, which we did this quarter, as well as opportunities for inorganic growth. Our acquisition of C Enterprises during the second quarter gives us a solid fiber optic offering that’s scalable and complimentary to the rest of our business. Additionally, we believe we can leverage their manufacturing capabilities to strengthen our small cell product offering to the wireless market, providing an opportunity for future revenue growth as the 5G rollout and the related densification investment starts to gain steam.
While we've not yet seen this positive impact to small cell spend with C Enterprises, we are seeing significant increases in their historical volumes in core telecom and fiber and data cable offerings. We're also seeing that as we acquire companies, we can provide a reinvigorated approach to growth when they're aligned around a bigger goal.
We're very happy with the addition of C Enterprises, and how well they’ve fit with our growth oriented company culture. As importantly, we feel that this acquisition was a great use of capital to grow the business. We feel that we negotiated a positive deal for everyone involved and we're pleased that we're already showing accretive results.
We remain committed to both accelerating our growth organically and by adding growth through acquisitions. As we've mentioned on past calls, on the M&A front, we were committed to doing at least one acquisition this year, and we did. While we continue to pay a nice dividend, we believe that the bigger opportunity for us is to invest in our growth.
Our balance sheet remains strong and provides us with significant resources to pursue additional acquisitions that makes sense. We still see some interesting candidates in the marketplace, and there's still the possibility of additional acquisitions this year.
As far as acquisition targets, had a handful of conversations that are always down the path. Generally, I'm interested in companies in the $10 million to $20 million revenue range, with similar products and channels to ours to give us access to a new product set and new customers or segments.
As I mentioned earlier, one area of focus is expanding our overall offer of the small cell bill of materials so that we can capitalize on the upcoming 5G densification opportunity, but we're also looking to potentially own other passive components that we can sell through our growing distribution channel. We're very focused on culture when we review potential acquisitions, as we can benefit from an easier integration when light minds are involved and accelerate the process of moving the business forward.
Finally, I'm interested in talent to elevate our team and help drive our growth. As I've said, in the past, when it comes to M&A, I'm focused on getting it right and not just doing it quickly. One bad acquisition can set back a lot of the hard work that we've been doing.
Continuing on the topic of the evolution of the company, we're very focused on a positive growth culture with a sales mindset. We're at a stage where it makes sense for us to add and upgrade talent and key roles in the company. And we're working hard that as we find savings through synergies and redundancies, we redeploy a portion of that capital to invest in the right talent to help us grow. We have some great things happening, and we want to keep the momentum going.
We're currently reviewing our overall sales structure and expect to launch a new sales organization to capitalize on our one company approach and offer to the market and to further evolve our approach of doing business the way our customers do business. We also have some best practice work to do on our operations and facilities, and think that over the next several quarters, we can make even more progress towards operating better as one company.
Related to our evolution, as you saw in our press release yesterday, we have added Sherry Cefali to our Board of Directors. Sherry has over 25 years of experience rendering fairness and solvency opinions and determining valuations of companies and securities. For extensive experience in mergers and acquisitions and company valuation work will be extremely helpful to us as we continue to pursue acquisitions as part of our growth strategy. I'm very pleased to have Sherry join our board, and look forward to her contributions as we continue executing on our plan for long-term growth.
On a related topic, as you'll see in our filing, William Reynolds, one of RF Industries long standing directors informed the board that he will retire from the Board of Directors immediately before this year's annual meeting of stockholders, and he does not intend to stand for reelection this year. I personally want to thank Bill for all of his contributions to the company over the years, and we all wish him well on his retirement.
Returning to the results. While we're still in the early phase of a multi-year transformation of our company, we're pleased with the steady progress that we're making. At the halfway point of this fiscal year, we've generated over $24 million in net sales, compared to $28 million, through the first six months of last year, which included that huge $20 million Q2. I'm very pleased with where we are so far for the year and we're getting better at delivering consistent and more predictable results.
与我们的发展相关，正如您在昨天的新闻稿中所看到的，我们已将Sherry Cefali添加到我们的董事会。 Sherry在提供公平和偿付能力意见以及确定公司和证券的估值方面拥有超过25年的经验。对于我们在合并和收购方面的丰富经验以及公司估值工作对我们非常有帮助，因为我们继续将收购作为我们发展战略的一部分。我很高兴让雪利酒加入我们的董事会，并期待她的贡献，因为我们继续执行我们的长期增长计划。
关于相关主题，正如您在我们的文件中看到的那样，RF Industries长期董事之一William Reynolds告知董事会，他将在今年的股东年会之前立即退出董事会，他并不打算今年代表连任。我个人想要感谢Bill多年来对公司所做的所有贡献，我们都希望他退休后能够做得很好。
We still have lots of hard work ahead of us, but to be only a few million dollars in sales behind last year's breakthrough results at this point is a positive position to be in. While our Tier-1 wireless carrier customer continues to spend as expected is at a lower pace so far compared to last year.
It's important to note that we do lots of other business in the wireless market through our distributors with contractors, neutral hosts, two way radio customers and tower companies. We're building and deploying traditional cellular macro sites, distributed antenna systems, indoor and outdoor public safety networks and others. And we've also been performing well in growing our business in other markets. We see all of that is very positive.
So with the coming 5G rollout, and the related spend on densification, we feel we're well positioned for additional growth. It's important to remember that the 5G spend is as much about coverage everywhere as it is speed. And that coverage everywhere idea fits perfectly into our growing DAS product business and the coming small cell waves.
While the wireless market is our biggest growth potential in the short-term, we have major opportunities for growth beyond wireless as we continue to leverage and expand our distribution channels and improve our execution. As we look to Q3, we expect another strong quarter with both sequential and year-over-year revenue growth. And we expect to continue to be profitable on the bottom line.
With that, I'll now turn the call over to Mark for a detailed review and discussion of the financial results for the quarter. I think I wormed up the crown [ph]. Mark?
Thank you, Rob and good afternoon, everyone. Net sales in the second quarter 2019 were $13.6 million, a sequential increase of $3 million, or 28% compared to the preceding first quarter and $20.5 million in the second quarter a year ago. The sequential increase in sales was driven by both project work in the OEM and wireless carrier market and increases in traditional run rate business as well as six weeks of revenue contribution from C Enterprises, which we acquired during the quarter. The year-over-year decline in sales is the result of the largest series of orders in company history that we recorded in the second quarter a year ago.
Gross profit for the second quarter was $4.1 million, a sequential increase of $949,000 or 30%, compared to $3.1 million in a preceding first quarter, and a $7.6 million in the second quarter last year. Gross margins were 30%, comparable to the prior sequential quarter. Despite the tariffs and other macro pressures that are part of the current economic environment that most everyone's dealing with, we are pleased to continue to maintain solid margins.
Selling and general expenses were $2.4 million, compared to $2 million in the preceding first quarter and $3.1 million in the second quarter last year. Selling and general expenses as a percentage of sales for the second quarter were 18% compared to 19% of sales in the preceding first quarter, and 15% of sales in the second quarter of fiscal 2018.
Selling and general expenses included one-time cost of approximately $100,000 related to our acquisition of C Enterprises during the quarter, excluding their related costs, selling and general expenses as a percentage of sales in Q2 would have been 17%.
Net income for the second quarter with $1.1 million, or $0.11 per diluted share, a sequential increase of 66% from the preceding first quarter and compares to net income of $3.2 million, or 34% -- $0.34 per diluted share in the second quarter of fiscal 2018. The decline in net income for Q2 2019 as compared to Q2 2018 again was the result of the largest series of orders in the company's history in a year ago second quarter.
Turning to the first six months of fiscal 2019, net sales were $24.3 million, compared to $28.5 million, which included the huge Q2 results in the first six months of fiscal 2018. Gross profit for the first six months was $7.2 million, compared to $10.1 million, while gross margins were 30% of sales, compared to 36% of sales in the same period last year.
Selling and general expense were $4.4 million, or 18% of sales, compared to $4.8 million, or 17% of sales in the first six months last year. Income from continuing operations for the first six months of fiscal 2019 was $1.7 million, or $0.17 per diluted share, compared to income from continuing operations of $3.5 million, or $0.38 per diluted share in the same period last year.
Total cash and cash equivalents were nearly $14 million at the end of second quarter, essentially unchanged from the previous quarter. Our current backlog stands at $10 million, which is our third straight quarter with backlog of over $10 million.
谢谢Rob，大家下午好。 2019年第二季度的净销售额为1360万美元，比上一季度增长300万美元，增幅为28％，而去年第二季度为2050万美元。 OEM和无线运营商市场的项目工作以及传统运营率业务的增长以及我们在本季度收购的C Enterprises的六周收入贡献推动了销售的连续增长。销售额同比下降是我们在一年前第二季度录得的公司历史上最大的订单系列的结果。
第二季度的净收入为110万美元，或每股摊薄收益0.11美元，比上一季度连续增长66％，而第二季度的净收入为320万美元，即每股摊薄收益的34％ - 0.34美元。 2018年第二季度的净收入与2018年第二季度相比再次下降，这是该公司一年前第二季度历史上最大的订单系列的结果。
That concludes my discussion. I'll now turn the call back to Rob.
Thank you, Mark. As our financial results illustrate our strategy for long-term is beginning to pay off. We generated solid sequential growth in sales in the second quarter, reflecting growth in both of our reporting segments. This increase included both organic growth in the low-double digits and inorganic growth from our recent acquisition.
We remain very focused on our key initiatives to leverage our strong customer relationships and channel partnerships to further expand our footprint in the marketplace. And to do so in a profitable manner, as we accelerate the work on our three year plan to grow to $100 million in sales. We appreciate the partnerships with our customers, distributors and suppliers, the hard work of our employees and the support of our shareholders.
With that, I'd like to open the floor to questions. Cody, we're ready to take our first question.
谢谢，马克。 由于我们的财务业绩表明我们的长期战略正在开始取得成效。 我们在第二季度的销售额实现了稳定的连续增长，反映了我们两个报告部门的增长。 这一增长包括低位数的有机增长和我们最近收购的无机增长。
我们仍然非常关注我们的关键举措，以利用我们强大的客户关系和渠道合作伙伴关系，进一步扩大我们在市场中的足迹。 并以有利可图的方式这样做，因为我们加快了我们的三年计划的工作，以增加到1亿美元的销售额。 我们感谢与客户，分销商和供应商的合作伙伴关系，员工的辛勤工作以及股东的支持。
Thank you. [Operator Instructions] We'll take our first question from Aman Gulani with B. Riley FBR.
谢谢。 [操作员说明]我们将从Aman Gulani和B. Riley FBR首先提出问题。
Hey, guys. Hey, thanks for taking the question. First question I guess, are you seeing any supply chain or a pipeline disruption from the comp administration to tariffs on China, and maybe to a lesser extent Mexico?
大家好。 嘿，谢谢你接受了这个问题。 我想，第一个问题，你是否看到任何供应链或管道中断从管理部门到中国的关税，可能在较小程度上墨西哥？
Yes, thanks. We're certainly seeing and it's not new, but I think we're seeing it from China in particular. It started probably toward the end of last calendar year, and we've generally mitigated it. But it's not always a direct -- I think to your question, it's not always a direct impact. Sometimes it's just a slower supply chain, that we can't quite put our finger on why something slowed down, because we may be even buying from someone in the United States. But they may be getting products from somewhere overseas.
And so we see some of it, I think, we saw a little bit of hard impact from the tariffs, small dollar amount, and I think we've generally mitigated it. But it's definitely, I think, causing just the speed of execution kind of challenge in the supply chain overall. Nothing from Mexico that we've experienced so far.
对了谢谢。 我们当然看到它并不是新的，但我认为我们特别从中国看到它。 它可能在上一个日历年结束时开始，我们通常会减轻它。 但它并不总是直接的 - 我想你的问题，它并不总是直接的影响。 有时它只是一个较慢的供应链，我们无法完全理解为什么放慢速度，因为我们甚至可能从美国的某个人那里购买。 但他们可能会从海外的某个地方获得产品。
所以我们看到其中一些，我认为，我们看到了关税，小额金额的一点点硬影响，我认为我们通常已经减轻了它。 但我认为，这绝对会导致整个供应链中执行速度的挑战。 到目前为止我们没有经历过墨西哥的任何事情。
Got it, that's helpful. Okay. And then can you talk about the C Enterprises acquisition how that's performing relative to your internal expectations?
知道了，这很有帮助。 好的。 那么你能谈谈C Enterprises收购相对于你内部期望的表现吗？
Yes, sure. So they I think as some of the comments talked about, we're happy with what they're doing. Last calendar year, they did $8.7 million in sales in the six weeks that we had them in the quarter, they were at a run rate that was better than that, I think we're pleased with the way they're executing. We expected them to be a creative this year, and they have been thus far. We're pleased with that as well. And then, I think the final piece was just love to have in the team as part of RF Industries, they're responding well to being a part of it, and cross selling between the different kind of historic divisions that we've had the different product areas.
Love the relationships they have with customers and how they're executing, they've got a great operation. And we're thankful to have found them and been able to work what I think is a really good deal for everyone involved. And, they're executing really well as part of the company.
是的，当然。 所以我们认为，正如一些评论所谈到的那样，我们对他们正在做的事情感到满意。 在上一个日历年，他们在本季度的六周内销售额为870万美元，他们的运行速度比这更好，我认为我们对他们的执行方式感到满意。 我们预计他们今年会成为一个创意人，他们到目前为止。 我们也很满意。 然后，我认为最后一件事只是作为RF Industries的一部分而在团队中拥有，他们作为其中的一部分做出了很好的回应，并且在我们拥有的不同类型的历史分歧之间进行交叉销售。 不同的产品领域。
热爱他们与客户的关系以及他们如何执行，他们有一个很好的运作。 我们很感激找到他们并且能够为所有参与者工作我觉得这是一个非常好的交易。 并且，他们作为公司的一部分执行得非常好。
Thank you. Okay. And last question for me, and I know you've already talked about M&A a little bit, but if you could give me a little bit more color on the pipeline for any potential tuck-in acquisitions. And then maybe if you could touch on your specific capabilities that you might be looking for. And then the last part of that question, how might you find that to the potential future acquisitions?
谢谢。 好的。 对我来说最后一个问题，我知道你已经谈过并购了一点点，但如果你能在管道上给我一点颜色，可以进行任何潜在的收购。 然后，也许你可以触及你可能正在寻找的特定功能。 然后是问题的最后一部分，您如何才能找到潜在的未来收购？
Yeah, sure. So I think that from a pipeline perspective, I guess, the overtone to the whole thing is I like passive components. And I've said that before, but it's I think, just to make sure everyone understands what I mean by that. Radios and Ethernet switches and routers, and sort of the active components that cause a network, I think are harder for a company to pull off at our size, just from an R&D perspective. I think it's tough to get it right.
And so, I like passive components, wire, cable, power, and closures, maybe antennas, those kinds of things are concrete. I like to say it's great concrete you pour it, it stays that way 50 years, of still great concrete, I like that. It's easy to understand, it has a core infrastructure need across a lot of applications. And so when we look at a pipeline, you can assume as those kinds of companies that are in there offering wise. Like companies that are able to make money and be profitable. And then how do they go to market, ideally, they would go to market in a way that's consistent with using distribution or some portion of distribution.
And I think, sales wise $10 million to $20 million in sales. I think I've said before, if I could find more transformational deals that’s larger than that, I would absolutely be interested in it. I've not found that so far, at least one that's interested and that makes sense for us. And so that may lead into the how do we finance it kind of question.
I think if we had to take on some debt, we would absolutely do it. We're pretty -- we're in pretty good cash position at the moment sitting somewhere in the low to mid-teens. So we've got cash to be able to do deals. I think we would -- the larger the deal, the more transformational, we would likely go the debt financing route versus using that I think our stock at this point -- the paper is not quite worth what I think it should be.
And so, opinion wise, that's probably not the right vehicle for us to use. So general answer is we would likely take off some debt to pull off something if we needed it.
我想如果我们不得不承担一些债务，我们绝对会这样做。我们很漂亮 - 我们目前处于相当不错的现金状态，目前坐在中低端的某个地方。所以我们有现金可以做交易。我认为我们会 - 交易规模越大，转型就越多，我们可能会采用债务融资路线而不是使用我认为我们现在的股票 - 这篇文章不值得我认为应该是这样。
Got it. Thank you very helpful. I'll pass it on.
得到它了。 谢谢你非常有帮助。 我会传递它。
Cool, thank you.
Thank you. We'll take our next question from Chris Chowsky [ph] with -- a Private Investor.
谢谢。 我们将接受Chris Chowsky [ph]的下一个问题 - 私人投资者。
Hello, good afternoon, and congratulations on great quarter.
So a lot of my questions were already answered. I just want to make a statement that as a shareholder appreciate your statement that you're not looking to use stock for acquisitions, I think for thinly traded stock that's very dangerous. So I appreciate that, and I think we all appreciate that. My -- let me see what questions hasn't been answered. So can you tell us whether you plan on having a sequential organic growth in the next quarter?
所以我的很多问题都已经回答了。 我只是想作一个声明，作为一个股东，感谢你的声明，你不打算用股票进行收购，我认为对于交易量很小的股票而言非常危险。 所以我很欣赏这一点，我想我们都很欣赏这一点。 我 - 让我看看哪些问题没有得到解答。 那么您能告诉我们您是否计划在下个季度实现连续的有机增长？
Yes, so sequential meaning, Q3 over Q2, is that what you are asking.
Yes. So I think that's kind of the I guess the punch line to my statement, as we wrap, before we started taking questions is that our expectation is that [indiscernible] going to give us growth over Q2. And, at this point, we're expecting that to be organic and that'll also be year-over-year growth in that scenario. So whether it's Q3 over Q3 last year or Q3 over Q2, our expectation is that we’ll grow over the quarter.
是。 因此，在我们开始提问之前，我认为这就是我的说法中的一句话，我们的期望是，我们的期望是[音频不清晰]会让我们在第二季度增长。 而且，在这一点上，我们预计这将是有机的，并且在这种情况下也将是同比增长。 因此，无论是去年第三季度的第三季度还是第二季度的第三季度，我们的预期是我们将在本季度增长。
Yes, but in Q3, you have a full quarter of C Enterprises, so not all of your growth will be organic. So do you anticipate some organic growth in addition to that?
Yes, I think we do. I mean, the plan all along is for us to -- on a quarterly basis layer organic growth along inorganic growth. I think one of the nuances to that is, once we buy something, and I think in this case, looking at C Enterprises, we're already starting to see sort of this cross pollination of sales of products from one historical company, through what would have been another. And so it gets a little -- the line gets a little blurrier around what's organic versus not at that point, because it’s not product that’s necessarily would have been sold that same way.
So my very simple way of looking at it is, we need to sell stuff, and we need to make stuff. And I don't really care who's selling it, which historical division or where it’s going, we need to look at the overall goals of the business in total. And I think that's generally where we've got people focused. And so while our expectation is organic growth, and then layering in the acquisition growth, it gets a little tougher for me to tell the difference, I guess, in pieces of the revenue going forward.
是的，我想我们做到了。我的意思是，一直以来的计划都是按季度在无机增长的基础上进行有机增长。我认为其中一个细微差别就是，一旦我们买了东西，我认为在这种情况下，看看C Enterprises，我们已经开始看到这种来自一家历史公司的产品销售的交叉传播，通过什么会是另一个。所以它得到了一点点 - 线条在有机物与有效物之间变得有点模糊，因为它不是必然以同样的方式出售的产品。
Okay, I appreciate that. And about the backlog, you increased revenues, again sequentially, but the backlog did not increase. That's something we should be worried about, or is the -- I'm sure you do a lot of business that doesn't get reflected in backlog because it gets booked and shipped in the same quarter. But is there anything in the backlog?
好的，我很欣赏。 关于积压，你再次按顺序增加收入，但积压没有增加。 这是我们应该担心的事情，或者是 - 我确信你做的很多业务都没有反映在积压中，因为它在同一季度被预订和发货。 但积压中有什么东西吗？
Yes, so I don't have any concerns on the backlog, I actually think it's a great number. Just to recap a little bit, if we look historically prior to 2017 the backlog was $2 million, $2.5 million, [indiscernible] we're now seeing it sitting at $10 million, $8 million, $12 million, which quarter you look at over the last six quarters or so. So I think the fact that we're disclosing it’s good we’re telling story. It's indicative of just -- there's a healthy amount of business sitting there.
But your point is a good one that we do a huge amount of bookings business, it's fast turn, where you're really getting a snapshot of the end of the specific month that happens to be the end of a quarter, we're talking about backlog. So it's not always reflective of what it might be at any given second, it just happens to be the moment we look at it and I think north of $10 million, I’m pleased with that number.
是的，所以我对积压没有任何顾虑，我认为这是一个很好的数字。 回顾一下，如果我们在2017年之前的历史看，积压是200万美元，250万美元，[音频不清晰]我们现在看到它的价格分别为1000万美元，800万美元，1200万美元，这个季度你会看到 过去六个季度左右。 因此，我认为我们正在披露它是好事我们正在讲故事。 它只是表明 - 那里有一个健康的业务量。
但是你的观点很好，我们做了大量的预订业务，快速转向，你真正得到了特定月份结束的快照，恰好是一个季度结束，我们正在谈论 关于积压。 所以它并不总能反映出它在任何特定时刻的情况，它恰好是我们看到它的那一刻，我认为在1000万美元之后，我对这个数字很满意。
All right. And lastly, did you disclose the purchase price for C Enterprises?
行。 最后，您是否披露了C Enterprises的购买价格？
It's -- yes, it's in the queue that for this quarter. It's in there. So it's less than a $1 million. You'll see the specifics in the queue.
是的 - 是的，这是本季度的排队。 它在那里。 所以它不到一百万美元。 您将在队列中看到详细信息。
Okay. All right, thanks. That's it for me. Good luck.
好的。 好的，谢谢。 这对我来说。 祝好运。
Sure, thank you.
We will now take our next question from Aaron Martin with AIGH Investment Partners.
我们现在将向Aar Investment Partners提出Aaron Martin的下一个问题。
Hi, Rob, hi, Mark. Congratulations and I apologize for the background noise, with my kids. Most of my questions have been answered, but I want to go back to the backlog question, was the C Enterprises any of the backlog from them, and were they also primarily a book and ship company? And perhaps that's why some of the total revenue growth just shows up in more growth from the backlog?
嗨，罗布，嗨，马克。 恭喜，我和我的孩子们为背景噪音道歉。 我的大多数问题都得到了回答，但我想回到积压问题，C Enterprises是否有任何积压问题，他们还主要是书籍和船舶公司吗？ 也许这就是为什么总收入增长中的一部分会从积压中显示出更多的增长？
Yes, so a small portion of the backlog would be attributable to them. But yes, most of what they do is book and ship the real fast earned stuff. So yes, you're right with your assumption.
是的，所以积压的一小部分可归因于他们。 但是，是的，他们所做的大部分工作都是预订并运送真正快速赚来的东西。 所以是的，你的假设是正确的。
Okay. I think that covers and most of the other questions were answered and we'll follow-up offline. Thank you.
好的。 我认为这些封面和大多数其他问题都已得到解答，我们会在线下跟进。 谢谢。
Thank you. We'll take our next question from Hall Grainger [ph], private investor.
谢谢。 我们将接受私人投资者Hall Grainger [ph]的下一个问题。
Hi, Rob and Todd and Mark, thank you for taking my questions. I’ve got a few comments and a few questions if that's okay.
I'm pleased with your quarterly results. So let me start at 40,000 feet. Rob as I've told you before, I'm a big fan of your management style. And in particular, the putting out a public metric of growing the company to $100 million in sales over three years. So doubling the company over three years. I think that's a fantastic example, for other peer group and small cap peer group. And that's something that others should emulate.
我对你的季度业绩感到满意。 所以让我从40,000英尺开始。 我之前告诉过你的Rob，我很喜欢你的管理风格。 特别是，制定了一项公共指标，将公司在三年内的销售额提高到1亿美元。 三年来公司翻了一番。 对于其他同行和小型同行群体，我认为这是一个很好的例子。 这是其他人应该效仿的东西。
I appreciate that. Thank you.
But that's not all. I'm also a big fan of your -- of the 2019 corporate goals of cash and equity incentive plan, which was exhibit 1024 in your K. And in particular, the focus on earnings per share, which as an equity investor, I love to see companies focused on earnings per share. That's another thing which other companies should emulate and I guess some of it hasn’t -- some of the credit, I suppose goes to you, Rob and some to you Mark and some of the compensation committee I think that [indiscernible]. So -- but I think that's, that's a great, that's a great example.
If I can make one point, so it's really fantastic. I'll make the point that RH, Restoration Hardware in their 2017 proxy, they added also to not only earnings, but also stock price. But that's extremely unusual. What I don't like is when companies tie their management bonuses into things like EBITDA because the DE, of course, as depreciation, which could be from plants, which were built decades ago. And I don't really see that as being a great incentive for performance today.
但那还不是全部。我也是你的现实和股权激励计划的2019年企业目标的忠实粉丝，在你的K中展示了1024.特别是关注每股收益，作为股权投资者，我喜欢看到公司专注于每股收益。这是其他公司应该效仿的另一件事，我猜其中有些事情没有 - 有些信用，我想你，Rob和一些给你马克和一些薪酬委员会我认为[音频不清晰]。所以 - 但我认为那是一个伟大的，这是一个很好的例子。
Yes, I think for us, we want to tie and this is something that I think came with me and supported by the Board and by Mark and the team that we want to make sure that -- I'm a pretty pragmatic guy. So if shareholders are expecting a profitable business, then we're going to tie our team to a profitable business. I need everybody having the same goals. And we've trickled that down, not just from shareholders, if we're going to be a public company and have people investing in it. My goal should be tied to that same expectation.
And then, within the company, everyone's goals should be tied to that, whether that's an individual sales person, who's driving growth within an account base, or otherwise. And so I think I'm a pretty strong proponent of -- if everyone's looking at compensation, generally the same way around goals. It makes for a lot less battles.
是的，我认为，对于我们来说，我们希望能够打成平手，这是我认为并且由董事会以及马克和我们想要确保的团队支持的事情 - 我是一个非常务实的人。 因此，如果股东期望有利可图的业务，那么我们将把我们的团队与盈利的业务联系起来。 我需要每个人都有相同的目标。 如果我们要成为一家上市公司并让人们投资它，我们就会把这一点涓涓细流，而不仅仅是来自股东。 我的目标应该与同样的期望联系在一起。
然后，在公司内部，每个人的目标应该与之相关，无论是个人销售人员，谁在一个帐户基础上推动增长，或其他。 所以我认为我是一个非常强烈的支持者 - 如果每个人都在关注薪酬，通常以同样的方式围绕目标。 它减少了很多战斗。
Right. Yes. So I completely agree. I would note that what you're doing in my mind is somewhat unusual, and it's highly commendable.
对。 是。 所以我完全同意。 我会注意到你在我脑海里所做的事情有点不寻常，而且值得高度赞扬。
I appreciate that.
Okay. So and along with doing the best you can. So you’re recognizing the importance of acquisitions in your growth strategy. I think it's fantastic that you've added Sherry Cefali to the board with her extensive experience in M&A and valuation. So congratulations on that.
好的。 所以，尽可能做到最好。 因此，您认识到收购在您的发展战略中的重要性。 我认为，凭借在并购和估值方面的丰富经验，您已将Sherry Cefali添加到董事会中，这太棒了。 所以祝贺你。
Thanks. Yes, we're excited about, Sherry, joining. So it's great to have her.
谢谢。 是的，我们很高兴，雪莉，加入。 拥有她真是太棒了。
So regarding acquisitions. So in your Q that just came out moments ago. You identified the cost as $600,000 plus liabilities. So you say less than a million. The revenues I forget when it was, was it LTM or before you bought it over $8 million. So that seems like a very appealing acquisition. And rather than asking you why you guys wanted to do that acquisition, can we flip that around and can I ask -- it seems to me that C Enterprises wanted to join you. So what did they see do you think in joining you that was so appealing?
关于收购。 所以你的Q刚刚问世。 您确定成本为600,000美元加上负债。 所以你说不到一百万。 我忘记的收入是LTM还是在你购买800多万美元之前。 所以这似乎是一个非常有吸引力的收购。 而不是问你们为什么要做这个收购，我们可以翻转一下，我可以问 - 在我看来，C Enterprises想加入你们。 那么他们认为加入你们时他们看到了什么呢？
Yes, so I think, the biggest thing to summarize, I think for them and I can't speak on their behalf other than through our conversations, there's recognition that it's hard being a small company. And this is a tough space. And so some economies of scale and some leverage overall across a bigger business with more customers by a bigger sales structure and bigger pockets to back some things. I think that helps in almost any case.
And so what we saw was combining some operations would give them the benefit of some growth opportunities and give a lot of really good people and opportunity to do more. And, their ownership team was a great group, enjoyed working with them through the process. And I think their recognition, very similar to the way I look at things, their recognition of what's best for people, and how we could work together to have a good outcome really came through in the conversations.
And so, I think we drove a good outcome for them and for us, I feel great about it. And I appreciate what they've what they brought to the table so far and where we're looking forward. So I really think it was just more about a larger organization giving an opportunity there.
Right. Okay. So Rob, you said it would be accretive or maybe Mark said it was a accretive, accretive to earnings per share? How are you measuring accretive?
对。 好的。 所以罗布，你说它会增加，或者马克说这是一个增加，增加每股收益？ 你是如何衡量增长的？
Yes, just in the standard way, we're looking for profitability coming out of that business. So we're expecting this fiscal year to see a portion of our profitability coming from the C Enterprises operation.
是的，只是以标准的方式，我们正在寻找从该业务中获利的。 因此，我们预计本财政年度的部分盈利能力来自C Enterprises业务。
Okay, great. Can you quantify, so you had this the big -- you had a series of big orders from a customer in fiscal 2018, which drove record sales for you guys. And now Rob, you mentioned, that's continuing so far this fiscal year. Can you quantify how much of this year sales come from that same customer? Or, or maybe more, particularly from the same project?
好，太棒了。 你可以量化，所以你有这个大 - 你在2018财年得到了一系列来自客户的大订单，这为你们带来了创纪录的销售额。 现在罗布，你提到过，这个财政年度到目前为止还在继续。 您能否量化一年中销售额来自同一客户的数量？ 或者，或者更多，特别是来自同一个项目？
Yes, so we're not breaking it out that way from a disclosure perspective, but I think that the way we look at it or the easier way to talk about that versus specific dollars from that customer, it relates more that we've seen growth in the rest of our business at a much higher rate. So our distribution business is growing significantly, as measured by our RF coax and connector business, which was up 20% percent this quarter, and even larger last quarter.
So we're seeing that the percentage of the business, it's still a meaningful customer, and we love them, and we want to keep that going forever. But we're seeing the rest of our business grow at a larger clip to help keep the business going. And our concentration is coming down as a percentage over what you would have seen in any of our Qs last year. So that's a -- I think that's a healthy statement on you we're focused on making sure we're diversifying as much as we can.
And I think one of the things I said in my prepared comments was recognizing that a big opportunity gives you a chance to bridge to whatever's next for the company. And so we're accelerating around that concept that yes that was some big numbers, those numbers are not the exact same quantity as they were last year and this year. Okay, great, let's take advantage of a really great new relationship and some recurring revenue coming from that and some profitability related to it, to really perform at a much higher level and springboard to what's next, which I think we're doing pretty well.
因此，我们看到业务的百分比，它仍然是一个有意义的客户，我们喜欢它们，我们希望永远保持这种状态。但我们看到我们业务的其他部分增长更大，以帮助保持业务发展。我们的注意力比去年你们在任何一个Q中看到的都要低。所以这是一个 - 我认为这是一个健康的声明，我们专注于确保我们尽可能多样化。
Right, great. Okay. Rob, you mentioned that a change in the sales organization, as I understood what you said. How is the new sales model different than the previous sales model before you arrived?
对，很好。 好的。 Rob，你提到了销售组织的变化，因为我理解你所说的。 在您抵达之前，新的销售模式与之前的销售模式有何不同？
Yes, so I think there is probably a few things generally in that, one is taking advantage of the one company approach and making sure that our complete offer is available to any customer and they're clear on, who we are in total, what are the different things we can do copper, fiber, coax, multi-conductor, large, small sort of there's a broader offering that we have that I want to make sure we're blanketing existing and new customers with that offer in total. So they hear it as one company and one overall opportunity to work with us.
The second piece of it is, we've really doubled down on distribution as a key driver for our growth. So we've always used distribution in a portion of our business. We will always have a portion of our business that's more OEM centric and direct because it's more elaborate, it would be harder for a distributor to put that on the shelf and have a run rate kind of business, so we're always going to have a mix.
But with that said, we've really, in the business for us that is distribution friendly, and the RF coax and connector businesses is the most obvious. We're trying to run every penny of that through distribution, which is different than what we would have done in the past and C Enterprises as much the same way, the majority of their business is distribution centric with a smaller portion being more OEM, elaborate kinds of solutions.
So we want to pull that together, make sure we're handling those distributors the right way. And we're set up in a model that structurally allows us to do business the way they want to do business, joint marketing plans, leveraging the size and scope of who they are. So they're a force multiplier, which I have a background with some distribution in it. And I love distribution. I think for the right kinds of products it's a great place for us to be and we're doing a good job with it and we've got a chance with a little bit of restructuring to just make sure our resources are focused on handling and managing distribution and as strongly as we can.
Right. Okay, great. One my final question, you mentioned 5G, I guess, kicking in at some point in the future, if I understood that correctly, what are you thinking about when that might be?
对。 好，太棒了。 我的最后一个问题，你提到5G，我想，在未来的某个时刻，如果我理解正确的话，那你在想什么呢？
Yes, so we're seeing little kind of drifts and drabs of it now and there's obviously deployments happening. So I read the news, like everyone and we're all going okay, so it's happening. It is and each carrier is doing a nice job of turning up one or more cities with different technologies, whether that's more fixed or mobile, which is now coming online. I think the real spend though, I expect to see it next calendar year early.
My opinion and again everyone's kind of got a different exact opinion. There's some of it happening now, we know we're selling some products into the densification effort around 5G, we know we've put some hybrid fiber cables out in the market around more traditional tower based 5G, but I think the consistent spend, and the increase around it, small cell is a great example.
There's still a lot of questions that each carrier or neutral host company has around the final design for small cells, how that’s going to be deployed, which technology is in there. I think it's great that I see it all as opportunity, but I expect that we're in the infancy of the spend and I think we'll see it ramp over the next 12-24 months in a pretty meaningful way. I would expect 5G to have a pretty long tail to it, from a spend perspective. We're going to be deploying millions of small cells across the country that’s not a fast thing.
Right. So is it going to be -- would you expect it to be kind of delayed and then hit in next calendar year? And or you see it gradually ramping up during -- between now and then?
对。 它会是 - 你会期望它有点延迟然后在下一个日历年被击中吗？ 或者你看到它从现在到现在之间逐渐增加？
Yes, I think it's interesting. From our perspective, we're small in the space, we're getting a very small percentage of that total spend, and our products -- depending on the solution, our products may show up early in the cycle or as kind of a last touch. Oh, yes, we need these cables as well everybody handles that deployment differently.
But I think for us, we expect that it's going to continue kind of halting at the moment it’s a start and stop kind of thing where we see some and then it slows down and we see some and it slows down. I think it'll get more consistent for us going into next year. I'm not exactly clear at this point on do we see a massive volume increase. I think the opportunity for that’s there positioning today, the hardest part for us is to recognize when we sell a cable into a distributed antenna system, is it public safety, is it 4G, is it 5G, is it something else, we can’t always tell, some of those are pretty consistent products across them.
So, I expect the larger spend around radios and the mega deployments coming in next year I think for us, we'll see a consistent opportunity for that spend to grow. I just don't think we see it the same way as someone who makes one of the base station radios or there about.
是的，我认为这很有意思。从我们的角度来看，我们在这个领域的规模很小，我们在总支出中占很小比例，而我们的产品 - 根据解决方案，我们的产品可能会在周期的早期出现或者作为最后一种触摸。哦，是的，我们也需要这些电缆，每个人都以不同的方式处理这种部署。
Okay. Where these orders be coming from the same customer, was a big -- putting the big orders last year?
Well, I think we expect that business to continue, we've done -- our sales team has done a great job of taking care of that relationship, our production team has done a great job of executing to put out some pretty significant volume on those products. So we expect that to continue, but I think we also need to -- when we look at our low PIM Cable Assembly business, for example, which is traditional coaxial cable, we're selling a ton of that into that solutions than into small cell solutions that that to an earlier point, it's not always easy to tell, is that true 5G or is that just identification or both.
So I think we're going to see growth from our core business and our core products. I think the spend in the Tier-1 space from the one large relationship we talked about. I expect that to be consistent spend, but not the -- what we know today we're not expecting the big kind of lump that we saw of orders in a short period of time last year.
好吧，我认为我们希望业务继续下去，我们已经完成了 - 我们的销售团队在处理这种关系方面做得非常出色，我们的生产团队在执行方面做得非常出色，以便在 那些产品。 所以我们希望这种情况继续下去，但我认为我们还需要 - 当我们看到我们的低PIM电缆组件业务，例如传统的同轴电缆时，我们将大量的产品销售到该解决方案而不是小型 细胞解决方案，对于更早的一点，它并不总是很容易分辨，是真正的5G或只是识别或两者兼而有之。
所以我认为我们将看到核心业务和核心产品的增长。 我认为在我们谈到的一个大型关系中花费在一级空间。 我希望这是一致的支出，但不是 - 我们今天所知道的，我们并不期待去年在短时间内看到订单的大块头。
Okay, okay. And then once 5G hits, how long do you expect it to continue?
Yes, I mean, I have a very long expectation for what we're calling 5G, whether that's turning on macro sites, kind of traditional macro tower sites and rooftop sites in more urban areas, or densification at street level, small cell DAS in buildings and other venues and then you got to hit the rural markets. So it's going to take a while, I mean 4G spend still happening right now.
So I don't look necessarily at the generational aspect of -- is it going to be a short window or a long window. I think when we have new technology and it starts to have uptake, it's going to take a while for that to deploy. So I'm expecting 10 years, I don't know a long period of time, I don't think it's going to be a short window expect a long tail around that build.
是的，我的意思是，我对我们称之为5G的东西有很长的期望，无论是开启宏观网站，还是更多城市地区的传统宏塔站点和屋顶站点，还是街道层面的密集化，小区DAS in 建筑物和其他场地，然后你必须打到农村市场。 所以这需要一段时间，我的意思是4G花费现在还在发生。
所以我看起来并不一定是世代相传的 - 它是一个短窗还是一个长窗。 我认为，当我们拥有新技术并且它开始受到采用时，部署它需要一段时间。 所以我期待10年，我不知道很长一段时间，我不认为它会成为一个短窗口，期望围绕该构建的长尾巴。
Okay. Great. Thank you very much.
好的。 大。 非常感谢你。
Thanks. Appreciate it.
[Operator Instructions] It appears, there are no further questions in the queue at this time. I just comes back over to management for any additional closing remarks.
Great. Thanks, Cody. And thanks everyone for your interest in support of RF Industries. We look forward to reporting our third quarter of fiscal 2019 results in September. Thanks for joining our call and have a great day.
非常好。 谢谢，科迪。 感谢大家对RF Industries的支持。 我们期待在9月份报告2019财年第三季度业绩。 感谢您加入我们的电话，祝您度过愉快的一天。
Thank you. This concludes today's conference. Thank you all for your participation. You may now disconnect.
谢谢。 今天的会议结束了。 谢谢大家的参与。 您现在可以断开连接。
- RF Industries Ltd. 电话会议
- RF Industries Ltd. 财务报告
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